How to find the best used car deals

Franchised new car dealer revenues have grown at a 7.2% annual rate since 1992, about twice the rate of GDP. Furthermore, this increase came with a moderate risk, like the dealer's body did not lose money for just one year in the last twenty years - even throughout shortened cycle of industry down cycle. Lastly, Despite major changes in the automobile industry's structure, trader returns have remained high, with pretax ROE averaging 26.1% over the last twenty years. Athletes from almost all major sports have invested in new car dealerships: Rick Hendrick, Roger Penske, John Elway, Troy Aikman, Evander Holyfield, Arnold Palmer, Michael Jordan, Scottie Pippen and Alex Rodriguez to mention a few. This is the time you have been waiting for, reports Greg Gilmore in the June 2005 issue of Dealer Magazine. 

Johnny Lujack, winner of the 1947 Heisman Trophy and Chicago Bear Pro Bower, began a company in 1954 that will eventually expand into 16 franchises, spread over 40 acres, with sales of over 10, 000 vehicles and $150 million, annually. Lujack withdrew from the car business after nearly 50 years as a successful trader. After that he purchased one more dealership and after that, In 1995, sold the whole package to Republic Industries for $86 million. Although GM and Ford lost money, individual dealers made millions, according to NADA and Automotive News statistics, the average dealers' pretax margin varies between one and two percent of their total sales. Dealer Executive reported that last year ranked as the 4th best for new unit sales by franchised new franchise cars. Why? The traders capture a broader business base than the producer. Whilst the manufacturer makes its money on new car sales, dealers have the extra balance of parts departments, service departments, used car departments, financial services, insurance services and, in some case, body shops.

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